Election 2014

NCDEX Circular No: NCDEX/MEMBERSHIP-008/2008/262 (17-Nov-08) Introduction of New Category of Membership

Published on Tue, Oct 19, 2010   |  Source : Legal Pundits.com

Members are hereby informed that in terms of Rule 5 (4) of the Rules of Exchange, the Exchange has decided to introduce new categories of Trading Membership and Trading Cum Clearing Membership. The new category of trading members shall be referred to as Trading Members and the new category of trading cum clearing members shall be referred to as Strategic Trading Cum Clearing Members to distinguish from the existing trading cum clearing members. The eligibility and the terms and conditions applicable to such new categories are contained in this circular which is in addition to the Rules, Bye Laws and Regulations of the Exchange.

A. TRADING MEMBERS:

1. The new category of Trading Members (TM) would be entitled to trade on the Exchange platform on their own behalf and also on behalf of their clients/constituents. However, prior to being eligible to trade, they shall have to enter into arrangement in the manner and procedure as prescribed herein, with any Professional Clearing Member (PCM) of the Exchange or with any Member among the new category of Trading Cum Clearing Members (STCM) notified to be created in this circular. In terms of the aforesaid arrangement clearing and settlement of all the trades done by such Trading Members and incidental settlement obligations shall be undertaken by the new category of Trading Cum Clearing Members.

2. The new category of trading members shall be referred to as Trading Members and the provisions of Rules, Bye Laws and Regulations as applicable to Trading Members shall apply to this new category of Trading Members.

3. The net worth requirement and the applicable admission fee shall be as specified in the Annexure I. Exchange reserves the right to review and modify the net worth requirements and/admission fee at any time.

4. The existing TCM of the Exchange shall be eligible to apply for this new category of TM only after one year from the date of this circular.

5. The admission process would broadly be similar to that of TCMs, including allocation of Unique Member Code (UMC) by the Forward Markets Commission (FMC) for each of the Trading Member. The TM admission process will broadly involve the following steps:

i) Submission of Application in prescribed format with payments and documentation as prescribed

ii) Scrutiny and processing of the application

iii) Interview of the applicant by the Membership Committee

iv) Admission of TM after completion of prescribed formalities

v) Seeking allotment of UMC from Forward Markets Commission

vi) Activation of membership 6. The salient features of the Trading Membership (TM) shall be as under:

a. The TM will have rights to trade on his own account as well as on account of his clients but shall have no right to clear and settle such trades himself.

b. TMs shall get affiliated with any one of the Strategic Trading cum Clearing Members or Professional Clearing Members (STCM/PCM).TM and STCM/PCM shall enter into an agreement prescribed by the Exchange and STCM shall confirm to the Exchange in prescribed format (undertaking) to clear and settle all trades/transactions done by such affiliated TM and to meet all financial obligations arising thereto.

c. Billing for transaction charges in respect of trades executed by Trading Member (s) will be directly done by the Exchange and shall be collected through the STCM/PCM.

d. The Exchange would collect the applicable margins of Trading Members through STCM/PCM with whom the Trading Member is affiliated. It would be the responsibility of such STCM/PCM to collect margins from Trading Member and remit to the Exchange. Trading Members shall be responsible to collect applicable margins from their clients as prescribed under Bye Laws and Regulations of the Exchange.

e. Position limits for Trading Member(s) would be as are applicable to members of the Exchange.

B. STRATEGIC TRADING CUM CLEARING MEMBERS:

A new category of Trading cum Clearing Members has been created within the existing category of Trading cum Clearing Members (TCM) and shall be referred to as Strategic Trading Cum Clearing Membership (STCM) to distinguish from the existing category of TCM.

2. A STCM registered with the Exchange may, in addition to existing rights and responsibilities as TCM, shall be entitled to and liable to settle and clear the trades/transactions done by the Trading Members affiliated with it.

3. The net worth requirement and the applicable admission fee shall be as specified in the Annexure II. Exchange reserves the right to review and modify the net worth requirements and/admission fee at any time.

4. The existing Trading Cum Clearing Members (TCMs) currently registered with the Exchange, satisfying the increased Net worth criteria prescribed for STCM as per Annexure II and providing an additional security deposit as prescribed therein shall also be eligible to apply for Strategic Trading Cum Clearing Membership.

5. The admission process would broadly be similar to that of TCMs, including allocation of Unique Member Code (UMC) by the Forward Markets Commission (FMC) for each of the Strategic Trading cum Clearing Member. The STCM admission process will broadly involve the following steps:

i) Submission of Application in prescribed format with payments and documentation as prescribed

ii) Scrutiny and processing of the application

iii) Interview of the applicant by the Membership Committee. In case the applicant is an existing TCM, the interview may be dispensed with.

iv) Admission of STCM after completion of prescribed formalities

v) Seeking allotment of UMC from Forward Markets Commission. This will not apply to the existing TCMs who have already be allotted UMC as Trading cum Clearing Members.

vi) Activation of membership 6. The provisions of Rules, Bye Laws and Regulations of the Exchange as applicable to Clearing Members shall apply to the STCM in respect all trades/transactions done by Trading Members affiliated to such STCM.

C. PROCEDURES APPLICABLE TO TMs and STCMs:

1. Every Trading Member shall have to enter into agreement with any STCM in the format prescribed by the Exchange.

2. STCM shall confirm its affiliation to the specified TM(s) to the Exchange undertaking to clear and settle all trades and transactions done by TMs specified in such confirmation in the same way as such STCM is responsible to settle and clear the trades done by itself.

3. STCM shall be liable to pay applicable and prescribed margins, base capital and additional base capital in respect of all trades/transactions done by the TMs affiliated to it.

4. TM shall be responsible for compliance for Know Your Customer requirements stipulated by the Exchange from time to time, in respect of its clients.

5. TM shall be responsible for collection of margins from its clients as required under Rules, Bye Laws and Regulations of the Exchange.

6. TM shall be responsible to comply with all provisions of Rules, Bye Laws and Regulations as applicable to the Trading Members including issuance of contract notes to its clients in the manner as prescribed in the Bye Laws and Regulations.

7. Since STCM shall be liable and responsible for clearing and settlement of all trades and transactions done by the Trading Members affiliated to it, it shall be the responsibility of STCM to set the extent of exposure depending upon the Base Capital/Additional Capital made available by any such affiliated TM.

8. It may please be noted that in the event of any default by the STCM in clearing and settlement obligations or payment of margins, the STCM may be disabled by the Exchange in terms of Rules, Bye Laws and Regulations of the Exchange. In such cases, the affiliated TMs may not be able to take any further exposure.

9. A TM shall be permitted to be affiliated to only one STCM or PCM as the case may be, at any particular point of time.

10. The prescribed formats as referred in this circular are made available on the website of the Exchange.

11. The Exchange reserves the right to grant Trading Membership or Strategic Trading cum Clearing Membership at its absolute discretion and eligibility of any person does not confer any right or entitlement to become member.

12. In the event of any ambiguity in any of the provisions as stated in this circular, the clarification given by the Exchange shall be final and binding.

For and on behalf of

National Commodity & Derivatives Exchange Limited

Bhashyam Seshan

Company Secretary

ANNEXURE I

Criteria for the proposed TM structure

Sr.No

Particulars

TM Members of

APMCs or

Farmer

Organizations

(Rs)

TM-Others

(Rs)

1

Admission Fee (one time, nonrefundable)

2.50 Lacs

5.00 Lacs

2

Annual Membership Fees

0.10 Lacs

0.10 Lacs

3

Initial Margin (to be provided through

the Clearing Member)

i) Interest Free Cash Security

Deposit

ii) Collateral Security Deposit

STCM/PCM to

collect applicable

margins

STCM/PCM to

collect applicable

margins

4

Minimum Net worth Requirement

5.00 Lacs

5.00 Lacs



* Migration of existing TCMs to TMs will be allowed only after one year from the

date of this circular and Migration fee of Rs 5 Lacs will be levied for the same

ANNEXURE II

Criteria for the proposed STCM structure

Sr.No.

Particulars

TCM (who is not

clearing trades for

TM)

(Rs)

STCM ( TCM is

permitted to clear

trades for TM

(Rs)

1

Interest Free Cash Security Deposit

15.00 Lacs

20.00 Lacs* upfront

and additional 0.50

Lacs per TM as and

when affiliated to it)

2

Collateral Security Deposit

15.00 Lacs

50.00 Lacs

3

Admission Fee ( one time, nonrefundable)

5.00 Lacs

5.00** Lacs

4

Annual Membership Fees

0.50 Lacs

0.50 Lacs

5

Advance Transaction charges

0.50 Lacs

0.50 Lacs

6

Minimum Net worth

Requirement

50.00 Lacs

350.00 Lacs



*Existing TCMs desirous of becoming STCM will have to deposit Rs.5 lac in addition

to their existing deposit of Rs.15 Lacs

**This condition shall be applicable only to new STCM applicants and not to the

existing TCMs getting migrated to STCM.

 
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